Vision Fund slide points to more pain for SoftBank’s son

SoftBank Group Corp Japanese Chief Executive Masayoshi Son attends a news conference in Tokyo, Japan November 5, 2018. REUTERS/Kim Kyung-Hoon/File Photo

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  • Vision Fund public portfolio loss in Q1 could top $10 billion – analyst
  • Private writedowns unlikely to reflect market weakness – analyst
  • The Group’s financing options are limited in a context of portfolio collapse
  • SoftBank has completed more than 60% of the buyback program

TOKYO, Aug 5 (Reuters) – Rolling valuations in the listed portfolio of SoftBank Group Corp’s Vision Fund unit (9984.T) point to more pain for CEO Masayoshi Son as the group reports its April-June results on Monday. as investors cool off on the high-growth companies he favors.

Vision Fund’s public portfolio loss in the first quarter could exceed $10 billion, Redex Research analyst Kirk Boodry has estimated, after falls in robotics firm AutoStore Holdings Ltd (AUTO.OL), the e-commerce Coupang Inc and artificial intelligence company SenseTime Group Inc (0020.HK), whose shares fell nearly in half on the last day of June.

While visibility into Vision Fund’s private portfolio valuations is limited, writedowns contributed to Vision Fund’s record $26 billion loss reported in May as investor concerns over the outlook for high-growth stocks escalate. impacting private markets.

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The scale of the revaluation was underscored when Swedish payments firm Klarna raised capital last month at a valuation 85% lower than in a funding round led by SoftBank the year before.

Private portfolio writedowns are unlikely to reflect the current low valuations in the market, said Jefferies analyst Atul Goyal.

Chief executive Son had invested early through the second Vision Fund, in which he has a personal stake, but in May pledged to ‘play defense’ and rein in spending amid turmoil in the markets caused by rising interest rates and political instability.

The 64-year-old billionaire previously racked up personal losses betting on derivatives and publicly traded stocks through trading arm SB Northstar, which has since been closed.

The uncertainty within the tech conglomerate is compounded by the departure of a series of Son’s lieutenants. Rajeev Misra, a key architect of SoftBank’s drive to invest in early-stage startups, stepped down from managing Vision Fund 2 to launch his own fund.

The cost of insuring against a default in SoftBank’s debt and bond yields remains elevated, though below last month’s highs, and analysts point to the conglomerate’s limited funding options given portfolio weakness. . Read more

“Within Vision Fund itself, in the public holdings that they have, they don’t really have a lot of options,” Boodry of Redex Research said.

SoftBank depended on its large and liquid stake in e-commerce company Alibaba Group Holding Ltd (9988.HK) for funding. The group has now raised up to $22 billion using the shares, the Financial Times estimated.

The conglomerate is targeting an initial public offering for U.S. chip designer Arm following a failed sale to Nvidia Corp (NVDA.O) but analysts are questioning the listing’s outlook.

SoftBank launched a 1 trillion yen ($7.5 billion) buyback last November, backing stocks that fell about half from March 2021 highs but had used more than 60% of the capital at the end of June.

($1 = 134.1600 yen)

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Reporting by Sam Nussey; Editing by Christopher Cushing

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